Fitch: OMV looks good in bad market

LONDON, Aug. 28 (UPI) -- Despite the weak crude oil market's draw on revenue, Austrian energy company OMV is performing well but production may suffer, a ratings agency said.

OMV said in its latest financial report spending through the first six months of the year was down 23 percent year-on-year. Chief Executive Officer Rainer Seele said the operating environment for company in the weakened crude oil market "remains challenging."

Crude oil prices are significantly lower than last year because of slower economic growth from key economies like China, a rise in oil production from the United States and an expected rise in oil production from Iran.

In a report issued from London, Fitch said the company was stable, though it would face pressure on the production side of operations.

"In this oil price environment we do not expect OMV to increase its hydrocarbon production as it had previously planned," it said.

OMV gave up on a goal of producing around 400,000 barrels of oil equivalent per day by 2016 because of the weakened economy. Fitch it "conservatively forecast" total oil and gas production by 2018 would be around 315,000 boe per day because of declines in legacy assets in the North Sea and conflict in Libyan and Yemen.

OMV said its daily net production was up 1 percent year-on-year, though operations in troubled Yemen and Libya remain closed because of violence plaguing both countries at least since the so-called Arab Spring movement gained momentum in 2011.

Operating costs dropped 19 percent year-on-year, which Fitch said was a reflection of cost-cutting measures by OMV.

"We view this achievement as positive given that OMV operates in relatively high-cost areas such as the North Sea and Central and Eastern Europe," it said.

OMV said it could see future growth opportunities should investment potential emerge in a post-sanctions Iran.